Awaiting The Fed Decision: Where Do Rates Go Now?

9/17/2013 6:00AM

A summer of rising interest rates has led up to this week's Federal Reserve policy committee meeting, with the Fed expected to start winding down its bond purchase program. Jack Hough and Michael Aneiro discuss what it all means for bond investors.

This transcript has been automatically generated and may not be 100% accurate.

I ... what's a huge week for bond investors with the Fed meeting this week to discuss what's next for its tapering program with me to discuss ... Barron's fixed income specialist Michael Merrill high Michael Kitchen What's Oromo the Fed this week ... it is the metadata busy waiting for the Andersons to remain in May when it still is signaling that it is going to cut back on its eighty five billion dollars bond purchases ... bars and wondered what has happened must've wanted it ... to its new was that to me that it's going to happen and this appears by all consensus expectations to be the week in which ... the Fed is actually going to do something this means cutting down its eighty five billion dollars ... monthly bond buys what we what we think are worn out some by we I mean you that but the funny thing is market expectations that way of treating themselves almost the Fed has given no ... specific guidance in terms of how much the ... same but the markets come to expect something in between ten and fifteen billion being shaved off of its Treasury and mortgage backed ... bond purchases ... so markets now ... that they expect that ... to be interesting see what the Fed does the Fed is not savings that the ... specifically but it knows now that markets are expecting that ... of course the mobile market is getting questions Odyssey as the asthe scaleback these purses that's bad for bond prices right right and it's a said a source of demand is also this is one of the with the reserves been propping up the parties that has been largely responsible for the sharp run up in bond yields of summer has taken place from May until now ... and we had yet another element of uncertainty going on in that today's news Lawrence Summers is going to remove his name from consideration as expansion and ... has ... been good for bonds because it ... he was he has been a wild card ... no one quite knew what policy he would ... prefer way as the ... frontrunner Janet Yellen is seen as more noble and tanking bonds are trading higher than the others are trading higher today on that news in bonds are probably going to sit on their hands for the next couple of days because Wednesday afternoon to find out if it plans to do and that's what it has been waiting for ... the quick answer to a problem that is plaguing the income investors can merely be answered in twenty seconds or thirds are watching it right ... everyone's looking at the longer issue bonds or same potential for ... losses and rates there rise yet ... third the richer seen in your bank account and I'm very short-term money they haven't watched ... so you have been Journal longer rendering have no yield on the shore and what you do where the relative values for income and sells a bond markets right ... there was a bit longer term bonds because they stand to lose the most if rates go higher ... you're probably best off be the same this year as the police this point ... is like municipal bond closed end funds the trading at discounts to net asset values ... looking for something in this for a five ... to ten year range to the individual bonds with some of the more ... reasons ... analysts have been recommending because for getting into the U pick up without exposing yourself some launch of its relative to Treasury bonds relative to corporate bonds municipal south of of of cricket event where concealed Raya sold off more than anything else and they still have rebounded to this seemed to be this that there was that that the municipal market is dominated by a retail investors who were sort of ... easily scared by things you can find no price discrepancies in their ticket deals was poses producing now continues to be the case ... that doesn't mean they have to value tomorrow is that instead of ... refusing to sell for a while ... but at